Section 209 of ITA, 1961 : Section 209: Computation Of Advance Tax

Explanation using Example

Imagine a scenario where Mr. Sharma, a salaried employee, also earns income from freelancing and has rental income from property. He needs to pay advance tax for the financial year 2023-2024. Here's how Section 209 of the Income-tax Act, 1961 would apply:

Mr. Sharma estimates his income from all sources for the current financial year. He includes his salary (after TDS), freelancing income, and rental income. He then calculates the income tax on this estimated income using the tax rates applicable for the financial year 2023-2024.

Next, Mr. Sharma reduces this tax liability by the tax that has already been deducted at source from his salary. If he had any other income where tax was deducted or collected at source, he would reduce that as well.

However, if Mr. Sharma had received any income without tax being deducted or collected, as per the proviso in clause (d), he cannot reduce his advance tax liability by the tax on that income.

The remaining amount after these deductions is the advance tax that Mr. Sharma needs to pay in the financial year 2023-2024.

If Mr. Sharma had agricultural income that was relevant for tax calculations, he would also need to include this as per the provisions given in the Finance Act of the relevant year.

If Mr. Sharma was part of a Hindu undivided family (HUF) with a member having an income exceeding the taxable limit, the advance tax would be computed differently as specified for such HUFs.